Innocent owner Kawartha Lakes loses at Court of Appeal

The Ontario Court of Appeal has upheld a decision of the Environmental Review Tribunal, refusing to allow an innocent landowner, City of Kawartha Lakes, to lead evidence about the actual polluters. Everyone agreed that the City was completely innocent of the fuel spill, which flowed onto municipal property through no fault of their own. But they were still ordered to clean it up.

The Court agreed that s. 157.1 of the Environmental Protection Act permits the Ministry of the Environment to issue no-fault orders to the owners of property requiring them to prevent, decrease or eliminate an adverse effect on the natural environment that may result from the presence of the contaminant on their property. In this case, that included the City. The City argued that, due to the “polluter pays” principle, the order should be directed against the actual polluters, instead of themselves.

“11….the Tribunal found that evidence of who was at fault for causing the spill should not be permitted.  It held that no evidence of the appellant’s innocence was necessary, since that was agreed, and evidence of who was at fault was not relevant since it would be of no assistance to the Tribunal in deciding whether the Director’s order to the appellant should be revoked or upheld.  …Evidence of others being at fault for the spill was simply irrelevant to the Tribunal’s task of determining whether the Act’s objective of environmental protection meant that the Director’s order should be upheld.  The Tribunal concluded that, despite this evidentiary ruling, in proceeding with its appeal, the appellant was entitled to argue that its status as an innocent owner together with the “polluter pays” principle should relieve it of the Director’s order.

[12]       On the appeal itself, the Tribunal explicitly considered the issue relating to the “polluter pays” principle.  It found that if environmental work was necessary, the environmental protection objective of the Act takes precedence over the “polluter pays” principle.  It concluded that it was not enough for the appellant to rely on its status as an innocent victimized owner without addressing how the legislative objective of environmental protection would be met if the Director’s order were revoked.  Since the appellant presented no evidence of an environmentally responsible solution in the event of revocation of the Director’s order, the Tribunal dismissed its appeal.”

The City argued, with considerable force, that they could not present evidence of “an environmentally responsible solution in the event the revocation of the Director’s order”, precisely because they were prevented from showing that the actual polluters could and should clean the contamination up.  Nevertheless, the Court agreed with the Tribunal:

“[19]       In this case, all agree that the appellant is innocent of any fault for the spill.  I agree with the Tribunal and the Divisional Court that evidence that others were at fault for the spill is irrelevant to whether the order against the appellant should be revoked.  That order is a no fault order.  It is not premised on a finding of fault on the part of the appellant but on the need to serve the environmental protection objective of the legislation.

[20]       The tribunal had to determine whether revoking the Director’s order would serve that objective.  Deciding whether others are at fault for the spill is of no assistance in answering that question.  Evidence of the fault of others says nothing about how the environment would be protected and the legislative objective served if the Director’s order were revoked.  Indeed, by inviting the Tribunal into a fault finding exercise, permitting the evidence might even impede answering the question in the timely way required by that legislative objective. ”

The City is therefore left to its existing lawsuit under section 100.1 of the Environment of Protection Act, which permits it to seek to recover its costs from persons who had control of the pollutant. And other innocent spill victims will now have to really think twice before calling the Ministry of the Environment.